Is Sterling's Housing Exposure a Risk Amid Ongoing Market Shifts?

Sterling Infrastructure, Inc. STRL operates as a diversified construction solutions provider, with strong positions in civil, specialty services and building segments. Its Building Solutions segment, which offers concrete and related services for single-family and multifamily housing, is naturally sensitive to the housing cycle.

Currently, the housing market in the United States is in hot water due to elevated mortgage rates and affordability pressures, which have toned down the demand for new houses. In the first six months of 2025, STRL’s Building Solutions segment revenues declined year over year by 7.6% to $199.3 million, due to the ongoing housing market uncertainties. Although this market has the potential to weigh on Sterling’s near-term growth, its focus on service diversification is expected to balance out, or rather minimize this risk factor in the mid or long term.

With the robust growth in federal initiatives and private-sector investments in infrastructure projects, Sterling is expected to balance out housing weakness. The company’s strategic shift toward large mission-critical projects has been aiding its revenue visibility and profitability structure, resulting in growth in its E-Infrastructure Solutions segment. As of June 30, 2025, E-Infrastructure Solutions’ backlog was up year over year by 44% to $1.2 billion, with major contributors being mission-critical projects, including data centers and manufacturing.

If Sterling continues to successfully pivot toward infrastructure and nonresidential opportunities, housing exposure may prove less of a threat and become more manageable for a broader and balanced growth strategy. Besides, the synergies from the recent acquisition of CEC Facilities are expected to catalyze STRL’s prospects in the upcoming period.

Do Housing Market Risks Impact STRL’s Competitors?

Sterling operates at the intersection of public infrastructure expansion and residential construction, which creates both opportunities and risks when compared with peers like AECOM ACM and MasTec, Inc. MTZ.

AECOM, as a global design, engineering and consulting powerhouse, derives most of its revenues from large-scale infrastructure, transportation and environmental projects, largely insulated from housing cycles. Similarly, MasTec has positioned itself as a leading player in energy, power and communications infrastructure, with minimal reliance on residential construction, allowing it to benefit directly from federal and state-level spending programs.

However, Sterling enjoys significant benefits from the unprecedented surge in U.S. infrastructure investment, particularly in transportation, water and civil projects. This aligns STRL more closely with public-sector demand trends that are also fueling growth for AECOM and MasTec. Compared with AECOM’s global consulting model and MasTec’s dominance in large utility and energy infrastructure, Sterling differentiates itself through more concentrated U.S. operations and a dual exposure that, while risky, provides upside potential when both housing and infrastructure markets strengthen simultaneously.

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This article originally published on Zacks Investment Research (zacks.com).

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